Acting for a lender

Question 1

What are the three requirements for a solicitor to represent their buyer and the lender?

Answer 1

1. Lender is an institutional lender
2. Standard certificate of title is provided
3. Confidentiality as to both parties is maintained

Question 2

What is required for the buyer’s solicitor to disclose information to the lender, and what must happen if this does not occur?

Answer 2

The buyer’s consent. If the buyer wishes for the solicitor to keep something from the lender, the solicitor must cease acting for both parties

Question 3

What is the purpose of a certificate of title?

Answer 3

It is a document in which a solicitor certifies that the title to the property is satisfactory for lending purposes
* there are no legal problems with the property – it has a “good and marketable title” - so the lender can safely lend against it
* who will own the property once the sale is completed
* the completion date when the funds are needed

Question 4

What are the lender’s requirements?

Answer 4

• the seller has the right to sell the property
• the physical condition of the land and buildings is adequate for the lender’s needs and the property is worth enough to cover any losses if the buyer fails to repay the mortgage
• you identify all the rights that the property enjoys
• you identify any third party rights affecting the property
• the property is free from any security interest (such as mortgages) or will be on completion
• the contract reflects the terms agreed between the parties
• there are sufficient funds to finance the purchase
• there are no discrepancies in the lender’s understanding of the transaction and the borrower’s circumstances
• the security document (mortgage) is valid and enforceable